NTPC eyes buyout of coal-based power projects, floats EoI

NTPC, the country's largest power producer with cash balance of around Rs 17,000 crore, has been considering increasing its generation assets through acquisition route. The company has initiated discussions with state electricity boards, private sector power generation companies, independent and captive coal-based power projects where promoters are finding it difficult to manage and develop their operations, and hence looking to exit.

"The company is contemplating increasing its generation assets by means of acquisition of coal-based power projects in India and abroad," NTPC said in an Expression of Interest (EoI).

The state-run generation and distribution company has floated an expression of interest from these probable parties.

"Through this EoI, NTPC intends to identify suitable power projects to carry out preliminary due diligence and shortlist these projects which qualify for carrying out detailed due diligence for a possible acquisition," NTPC said in the document.

The document further suggests that it would look at acquisitions of only coal-based plants that have domestic and imported coal tie-ups. Besides, the target project should have requisite land in possession, coal linkages with Coal India, water supplies, statutory clearances procured and power purchase agreements in place.

NTPC, with an installed capacity of 42,454 MW comprising of 22 coal-based and 8 gas-based projects, is adding 14,000 MW by 2017. This apart, 20,000 MW projects are under construction and NTPC don't foresee hurdles as they have already tied up fuel supply pacts.

Apart from projects being promoted by entities at the state level, NTPC is also believed to have received interest from several private players who are finding it difficult to take their projects forward due to variety of reasons.

With an EoI being floated, promoters of most of these projects are likely to make formal applications. A committee at the board level has already been formed to study such proposals.

With a healthy cash balance in its book and ability to execute projects at cost lower than anybody else at an average tariff of just Rs 2.96 a unit in FY13, NTPC is well positioned to salvage many of the projects whose economics have gone wrong, feel analysts.